Thanks to a strong econ-omy, British Columbia’s Liberal government has delivered an across-the-board 10% cut in personal income taxes for individuals earning up to $108,000 annually in its fiscal 2007 budget, unveiled on Feb. 20 in Victoria.

The tax cut, which comes into effect in July, means that British Columbians will soon be paying the lowest income tax rates in Canada.

The unexpected measure, which will cost Premier Gordon Campbell’s government about $1.5 billion over the coming four years, will save a family of four earning $70,000 with both parents working about $1,800 a year, the budget papers showed.

It also means that 250,000 British Columbians won’t pay provincial income taxes, while approximately 90% of all taxpayers would see some form of tax reduction.

This isn’t the first time the Liberals have slashed taxes. Within weeks of first taking power in 2001, the Campbell government cut incomes taxes by 25%. And the day after releasing the latest budget, Finance Minister Carole Taylor hinted at more cuts to come: “I can’t possibly know about timing, but I would say this isn’t the end of the road.”

Although businesses applauded the tax cut, not everyone was happy.

NDP Opposition leader Carole James says the cut will simply be eaten up by increased government fees and service charges: “The government can say we’re giving a tax cut, but they’re clawing it back with the additional fees families are now having to pay.”

She also says the NDP is now studying fee increases and new fees contained in the 2007 budget to see how they’ll add up.

In addition, the government has billed its 2007 budget as “Building a Housing Legacy” with what it says is more than $2 billion dedicated to housing over the next four years. However, critics argue that most of this, some $1.5 billion, represents the estimated value of the cut in income taxes over the same four years, which people could use to supplement their housing costs, according to Taylor.

Nevertheless, the budget did contain several other specific housing initiatives. They included a measure to exempt first-time homebuyers from B.C.’s property transfer tax on homes valued up to $375,000.

This could save a purchaser up to $5,500. That’s an increase in the threshold of $50,000 in Vancouver and Victoria and $110,000 in the rest of the province.

“Property values are soaring in every part of the province,” Taylor said in her budget speech. “In fact, statistics released this fall showed that average selling prices were higher in Kelowna than in places like Toronto and Calgary.”

In another housing initiative, low-income seniors will now be eligible for B.C.’s homeowner grant, regardless of the value of their homes.

The budget also contained $103 million in green initiatives, such as tax relief for purchasing hybrid vehicles.

The budget’s economic outlook has forecast continuing strength, with average annual growth of 3%. The budget surplus for 2006-07 is forecast to be $2.85 billion, with surpluses of $400 million, $150 million and $150 million expected for the following three years.

However, due to heavy capital spending, the total debt is expected to grow from $36.8 billion in 2007-08 to $40 billion in 2009-10. IE